North Korean Economy Watch

From the Korea Times:

Wild Rocambole Band _ Tallae Umakdan in Korean _ an all-female band of six North Korean defectors will release their first album here this August. Most studied at music schools in North Korea, or performed with state-run troupes.

Included on the album is “Hong Kong Lady,’’ one of the most beloved trot songs in South Korea along with several songs they learned in North Korea.

Leader Han Ok-jung, 28, who escaped the North in June 1998 is good at singing and Chinese while dancer Heo Su-hyang, 22, who fled in 2001, is well-versed in apparatus gymnastics and singing.

Kang Yoo-eun from Pyongyang, and Lim Yoo-kyung from North Hamkyong Province, both 19, sing and play the accordion.

To protect their families who remain in the North, two of the members, who are now South Korean citizens, use false names.

From the Korea Times:

Seoul to Promote Knowledge Sharing With N. Korea
By Kim Sung-jin
Staff Reporter

The government Thursday said it will continue to promote various projects to exchange economic knowledge with the reclusive North Korea.

Vice Finance and Economy Minister Bahk Byong-won said Thursday that private economic cooperation between the South and the North has become brisker than ever with the Kaesong Industrial Complex and North Korean tourism projects getting into full swing, but inter-government cooperation is still very limited.

“What we need more than anything else to further advance the cooperative inter-Korean economic relations is an extension of knowledge-sharing programs with the North,” Bahk said. He made the remarks at a conference on knowledge sharing for the economic development of North Korea at the Westin Chosun Hotel in downtown Seoul.

Participants in the conference included the Asia Foundation’s country representative in Korea Edward Reed, head of political section of the Delegation of the European Commission to Korea Maria Castillo Fernandez, former Swiss Agency for Development and Cooperation’s (SDC) North Korean office resident director Rudolf Strasser and Korea Institute for International Economic Policy (KIEP) president Lee Kyung-tae.

As Bahk noted, government-level economic exchange programs between the South and the North are still very limited although Seoul and Pyongyang agreed on revising a plan to dispatch economic inspectors across the demilitarized zone (DMZ) at the Inter-Korean Economic Cooperation talks held on Cheju Island between June 3 and 6.

“The Korean government will make consistent efforts to widen knowledge sharing with the North as well as with the international community,” Bahk said.

“We also hope that academia, non-government organizations and international organizations will play a leading role in extending inter-Korean knowledge sharing programs,” he added.

Annual inter-Korean economic transactions, including the transaction of merchandise and services such as tourism, have made a significant improvement over the past five years regardless of the political tension on the Korean Peninsula. They expanded to $1 billion in 2005 from some $200 million prior to the inter-Korean Summit held in 2000.

Meanwhile, the Korea International Trade Association (KITA) said Thursday that inter-Korean economic transaction, or trade, expanded 30 percent in the first five months of this year, thanks to vibrant industrial activity in Kaesong just across the inter-Korean border.

Between January and May, inter-Korean economic transactions amounted to $428.63 million, up 34.4 percent from the same period last year.

In the cited period, North Korea-bound South Korean goods jumped 35.4 percent to $264.97 million, and imports from the North increased 32.9 percent to $163.66 million.

Inter-Korean economic transactions are forecast to expand sharply next year as the number of South Korean manufacturers moving into the Kaesong industrial complex will reach 300 with the completion of the first phase of the industrial park construction project, up from current 15.

Seoul plans to help Kaesong house as many as 2,000 South Korean firms by 2012 when the complex is fully developed.

From Yonhap:

South Korea will intensify efforts in technical assistance and training for North Korea in order to help the communist state’s economy grow further, a government official said Thursday.

“We should help the North to enhance its understanding of economic principles and their operation mechanism, which will guarantee us more substantial and enduring results from economic assistance to North Korea,” Vice Finance Minister Bahk Byong-won said in a speech at a forum titled “Knowledge Sharing for Economic Development of North Korea.”

“Material assistance without economic knowledge and managerial capacity cannot contribute to sustainable economic growth,” he said.

Bahk said excessive transaction costs caused by the lack of adequate knowledge about economic principles, practices and international economy on the North Korean side have posed bigger threats to economic development than anything else.

“Some have suggested that inter-Korean cooperation has proceeded at a slow pace, but despite a rapidly changing environment, inter-Korean economic cooperation has shown remarkable strides,” he said.

Inter-Korean trade volume, which stood at US$2 million-$3 million before the 2000 inter-Korean summit, reached $1 billion last year, making South Korea the second-largest trading partner of North Korea, the official said.

Also, personnel exchanges and movement between South and North Korea have never been more frequent than recently, he said.

Bahk said economic cooperation between the Koreas, which has been regarded as one-sided, has also shifted to the one that is reciprocal and serves mutual interests, he said.

“South Korea, international organizations and nongovernmental organizations should seek to create synergies by exerting concerted efforts through sharing information among ourselves with regard to the knowledge-sharing experience with North Korea,” Bahk said.

The South Korean government will not spare any effort to vitalize knowledge sharing with North Korea for its economic development in close partnership with the international community, he said.

From the Korea Times:

South Korea’s Red Cross will provide $400,000 (a little over 388,000,000 won) to its North Korean counterpart along with 10 buses and 6 cars to facilitate more on-screen reunion meetings of family members separated by the inter-Korean border.

The provision is in line with an agreement both sides signed earlier this month through an exchange of letters via the Panmunjom truce village.

According to the agreement, the South will provide the North with cash and vehicles for promoting family reunions and will also give the North necessary materials for building on-screen family reunion centers in the North at the earliest possible date.

The North, for its part, will concretely inform the South of its use of the money, vehicles and materials, the agreement says.

South Korean Red Cross officials will also be allowed to inspect on-screen family reunion center construction sites.

The two Koreas started operating on-screen family reunions through video link on Liberation Day, Aug. 15 last year. Four on-screen sessions have so far been held, while 14 face-to-face reunions have been held since August 2000, including the ongoing session at Mt. Kumgang in the North.

“Most of the separated family members have become aged and, considering this trend, we need to resolve the issue as early as possible,’’ a South Korean Red Cross official said. “To expand the on-screen family reunion sessions, we concluded that the North needs to be equipped with more facilities for on-screen reunions.’’

from the Korea Times: 

Failure of Reconciliation in Japan
Continuous Efforts Needed to Achieve Mindan-Chongnyon Amity
 
It is regrettable last month’s historic reconciliation agreement between pro-Seoul and pro- Pyongyang Korean residents in Japan has unravelled in less than 40 days. The hugging and handshaking between Ha Byong-ok, leader of the pro- Seoul Korean Residents Union in Japan (Mindan), and So Man-sol, chairman of the pro-Pyongyang General Association of Korean Residents in Japan (Chongnyon), at the headquarters of the latter on May 17 was hailed as an end to the long-standing enmity between the two groups.

However, mounting opposition from Mindan’s rank and file has derailed the agreement. Discord among Mindan members was caused by the unilateral move of its leadership in declaring reconciliation with the Chongnyon. In a central committee meeting last Saturday, Ha said “we are virtually in a state of undoing our earlier reconciliation declaration.”

The primary responsibility for the confusion lies with Ha who hastily proceeded with the reconciliation, disregarding the opinions of provincial Mindan organizations. We can’t help but believe Ha’s personal ambition of achieving something as a leader disrupted the long-standing move to reconcile with its rival group. The important fact we have to consider is that reconciliation came at a time when the hostile mood of Japan toward North Korea is reaching a peak in connection with the abduction of Japanese citizens by North Korean agents.

Some of Korean residents belonging to Mindan were alienated from their Japanese friends after the report was released that Mindan reconciled with Chongnyon. Some Japanese are displeased with the reconciliation, asking: “Is Mindan also becoming an enemy to Japanese society?” The leadership failed to read the underlying sentiment of Japanese society and the hostile attitude of Japanese society strengthened opposition among Koreans to reconciliation.

The Korean residents’ groups have been at odds the last 50 years, symbolizing the territorial division of their fatherland. The invisible barriers between people of the two organizations in Japanese society were said to have been stronger than the DMZ dividing South and North Korea. But, we believe the ideological confrontation among the Koreans was a waste of energy for Japan’s largest ethnic group.

Though Korean residents are divided by the organizations with conflicting ideologies, they are living together in Japanese society where a market economy based on democracy has fully blossomed. We believe it is not so difficult for ordinary members of both groups to become friendly. What is important is that a change of attitude by Pyongyang is crucial to expedite reconciliation of both Korean groups in Japan. It is also hoped Korean residents in Japan continue their efforts to achieve ethnic solidarity through reconciliation in days to come.

from the Korea Times:

Moody’s Investors Service said that chances are above 50 percent for South Korea to have higher sovereign credit ratings in the future, but containment of North Korea risks is one of the crucial factors, a senior credit analyst at Moody’s said.

“The chance is more than 50: 50,’’ said Tom Byrne, vice president and senior credit officer at Moody’s Investors Service, at a media briefing in Seoul to mark launch of its Web site in Korean, Tuesday.

He said it was on the same ground that Moody’s raised its outlook for Korea to “positive’’ from “stable’’ in April. Moody’s has rated Korea at A3 since March 2002.

Byrne suggested that continued fiscal conservatism, favorable macroeconomic prospects and containment of North Korean risks could change the rating upward.

Regarding the North Korean risk, he explained that what is needed is not a complete elimination of the threat but an appropriate control of the risk.

“Back in 2003, our primary concern was increased geopolitical risks related with North Korea’s renewed nuclear weapons development.’’

He said Moody’s outlook on Korea has been determined by two factors since then, geopolitical concerns and credit fundamentals.

Regarding recent concerns over North Korea’s threat to launch a missile, Byrne said it is “a part of the geopolitical risks.’’

“As things stand for now, however, it’s too early to say whether the geopolitical situation has deteriorated,’’ he said, declining to mention its direct impact on Korea’s credit rating.

He said it is important to consider all parties involved, and emphasized that governments of the U.S., Russia, China, South Korea and Japan all should make efforts to stop the situation from deteriorating.

Byrne said that it is important to realize that the U.S. government is feeling very insecure since the September 11 terrorist attack. Consequently, the United States is taking a firm stance against North Korea and Iran, he explained. He said North Korea’s nuclear issue would be major concern of not only Bush administration but also a Democrat administration.

Byrne cited foreign investment as another crucial factor for Korea’s economic growth. He pointed out that Korea was very smart in overcoming the financial crisis, as it increased financial liberalization instead of closing its market. He said Korea is a bit exceptional as many Korean companies do make significant investment abroad. However, more progress should be made in inbound foreign direct investment, as it plays a crucial role in a long-term growth, he said.

He expected the Korean economy to grow 5 percent this year, and estimated next year’s growth rate at 4.5 percent.

He said the Korean government would need financial headroom as there will be increasing social welfare demands, probably an income support program for farmers after the signing of the Korea-U.S. FTA, and perhaps increasing aide to North Korea.

In spite of the increasing aid to North Korea, he doubted whether it would be effectively used there, as the communist country has the lowest government effectiveness indicator. The South Korean government was less effective than other OECD member countries, but was doing better than the governments of countries in Central Europe.

from the Korea Times:

The top U.S. envoy in Seoul has expressed serious concerns about the status of products made in the Kaesong Industrial Complex, North Korea, labeling them “poison” to the currently negotiated free trade agreement (FTA) between South Korea and the United States, a source said Monday.

The products made in the Kaesong Industrial Complex could poison the negotiating process of the South Korea-U.S. FTA and later the ratification process in the U.S. Congress, the source quoted U.S. Ambassador to Seoul Alexander Vershbow as saying during the Korea-U.S. Business Council meeting in Seoul last week.

Vershbow requested that Seoul exclude the goods made in Kaesong from the FTA negotiation agenda and asked Korean officials to explain to Korean lawmakers the U.S. position since it could dampen the FTA talks, the source said, asking not to be named.

Though Seoul was aware of U.S. opposition to the idea that products made in Kaesong are considered Korean products in trade, it did not expect Vershbow to be so negatively disposed to Seoul’s proposal.

The Seoul government has been trying to include the Kaesong products with other South Korean goods in the FTA negotiations with the United States as in its FTAs with Singapore, ASEAN and EFTA.

The Kaesong Industrial Complex is the flagship of inter-Korean business cooperation where 15 small and mid-sized South Korean companies operate, employing some 7,000 North Koreans.

Meanwhile, the ambassador hinted at the possibility of South Korea joining the visa waiver program (VWP), which allows visitors from countries to enter the United States for up to 90 days without a visa.

In response, Trade Minister Kim Hyun-chong said that if the United States includes South Korea in the VWP, it will be welcomed by South Koreans and helpful for the successful conclusion of an FTA between the two countries.

However, a participant in the meeting, who wanted to remain anonymous, said that he got the impression that the U.S. ambassador tried to use the visa waiver as a wild card to lead the FTA negotiations in favor of the United States.

“From a legal viewpoint, the FTA has nothing to do with the visa waiver. The Korean government must keep this in mind,” he said.

Eligibility requirements for nations to join the visa waiver program include a visa refusal rate of 3 percent or less for two consecutive years.

The annual meeting of the 19th Korea-U.S. Business Council ended last week, announcing its full support for the Seoul-Washington FTA.

From the Joong Ang Ilbo:

During the JoongAng Ilbo’s 10-day survey of North Korean economic venues in May, North Korea’s high dependence on China was very prominent. Noting that trend, North Korea experts in Seoul recommended that South Korea make efforts to increase its industrial investment in the North to assist the failing economy and allow it to make ends meet. Donating food and other aid, they said, was contrary to the aphorism, “Give a man a fish and he can eat for a day; teach him to fish and he can eat for a lifetime.”

Throughout the trip from May 11-20, North Korean officials proudly displayed a series of automated factories, calling them the models of the reclusive communist country’s modernization. The Daean Friendship Glass Factory was on the tour; officials said China had built the factory at no cost to North Korea. Similarly, production lines in several other plants were overwhelmingly “made in China.”

The March 26 Cable Factory in Pyongyang used Chinese machines; its raw materials appeared to be from China as well. The Pyongyang Cosmetic Factory, which produces cosmetics, toiletries and toothpaste, was also equipped with Chinese machines. The toothpaste production line used equipment from Nanjing Machinery, and the soap production facility was equipped by companies in Quingtao.

At the International Trade Fair in Pyongyang, most booths were set up by Chinese firms. Among the 217 companies that participated in the fair, more than 80 percent were Chinese or joint ventures that included a Chinese partner.

North Korea’s trade is also overwhelmingly skewed toward China: in 2004, nearly half of the North’s trade was with its neighbor. “North Korean industries are 90 percent dependent on China,” said Kim Suk-jin, a North Korean economy researcher at the Korea Institute for Industrial Economics and Trade.

That’s not entirely a bad thing, some economists here said; joining the world economy through China could become a catalyst for reform and opening of the North Korean economy. But they also said they were somewhat uneasy that China’s influence on the Korean Peninsula would become “unnecessarily” strong, reflecting deep-seated Korean unease about foreign influences on the peninsula. Referring to South Korea’s dependency on Japan in the 1960s and 70s for raw materials and facilities, they said that trade with Japan is still skewed in Japan’s favor.

Jeon Jong-mu, the president of HUM Construction Company, was in a party that traveled to North Korea for the international trade show with the journalists. He said North Korean officials had offered him the opportunity to participate in a project to mine aggregate ― rock, gravel and sand ―from the Chongchon River. In return for dredging the river, the offer reportedly went, the North would supply the material to his company.

According to the North Korean officials, the dredging is important to them because frequent flooding of the river damages nearby agricultural areas. “I thought the dredging work would be better for increasing rice production in the North than giving fertilizer,” Mr. Jeon said.

At the Chongsan Cooperative Farm, Ko Myong-hee, its manager, said no South Korean experts have ever visited there but that South Korea has provided it with rice and fertilizer. Lee Kyung-han, the manager of the Korean Standards Association, thought that was a symptom of a problem. He said experts from here should meet with their North Korean counterparts to improve productivity.

Others agreed that for the most part, the South has just been “giving fish” to the North. They said of the $1.6 billion in trade volume between the two Koreas, the South’s rice and fertilizer aid amounts to 35 percent. In the name of helping the poor, sick North Koreans, Seoul just ships rice, fertilizer and medicines.

Both Koreas should learn more about each other, said Kim Dong-ho of the Korea Development Institute. Some North Koreans believed that designating special economic zones would bring large foreign investments instantly, and complained that South Korean businessmen were not making investments in Kaesong Industrial Complex even after visiting the site. He said South Koreans also had a poor understanding of the North’s economy. He blasted the South Korean government and businesses here for making investments based on “rosy anticipations.”

Experts here said the government should focus more on building manufacturing facilities in the North. The March 26 Cable Factory in Pyongyang was modernized by a $2 million donation from North Koreans living overseas, said Kim Sok-nam, the plant’s manager. The Daean Glass Factory was also built with $24 million provided by China.

It would be asking too much, those experts said, to expect South Korean businesses to line up to make investments in the North after watching the woes of the Hyundai Group and the financial problems it faced after making its large investment in Mount Kumgang tourism.

If businessmen are reluctant to invest, perhaps the government should shift tactics. Rather than increase the amount of aid, which cost $365 million in rice and fertilizer alone in 2005, Seoul could offer investment assistance. That $365 million, after all, could have financed 15 Daean Glass Factory plants.

Mr. Lee of the Korean Standards Association proposed that government companies in the South might consider building factories in the North. Others agreed.

“The Kaesong Industrial Complex will take time to settle in,” said Kim Yeon-chul of the Asiatic Research Institute at Korea University. “On the other hand, Pyongyang, Nampo and other important economic venues in the North will be under China’s influence in as little as five years.”

Mr. Kim said South Korea should find ways to exercise its influence in core economic zones of the North. Instead of depending on the pioneer sprits of private firms, a state-run corporation in charge of industrial cooperation with the North should be formed to make profitable investments in the North’s industries, Mr. Kim suggested. “If such a firm existed, the South would have been able to carry out sustainable industrial projects in the North instead of providing light industry materials as aid,” he said. “There is a financial burden at the early stages, but that will eventually be reduced when the investment environment in the North improves, and the state-run corporation will be able to add resources from the international financial market on its own. That is why we need a state company for inter-Korean economic cooperation.”

Joong Ang Daily
6/22/2006

In the ground floor ballroom of the Yanggakdo Hotel annex in Pyongyang, the North Korean Chamber of Commerce hosted a trade information and investors’ relations conference on May 16. Senior North Korean trade ministry officials gave presentations on North Korea’s economic policy and investment climate. Rim Tae-dok, chief counselor of the trade ministry, said Pyongyang protected property rights of foreign investors and guaranteed the independence of their management. The North Korean official stressed that foreign investors would enjoy tax benefits and that the legal process of establishing companies in the North has been largely simplified.

Another senior North Korean official, Kim Ha-dong, also gave a presentation about Pyongyang’s export policy. Mr. Kim, a senior researcher at the trade ministry, said the communist country had been issuing permits for exports and imports after only a short review process. He encouraged investors to participate in trade.

The North Korean presentations were not very different from those given in any capitalist country, but the concept of “self-reliance” was prominent.

“We will build a self-reliant economy of Koreans and carry out trade on top of that,” Mr. Kim said. He added that North Korea’s self-reliance must not be damaged or controlled by foreign economies through trade.

During the JoongAng Ilbo’s 10-day survey of the reclusive communist country’s economic sites, Pyongyang’s dilemma ― self-reliant socialism versus economic development by attracting foreign investments ― was apparent. Some North Korean officials showed skepticism about China’s model of partially opening its economy, claiming that their country had to be run in a different manner.

“I have toured special economic zones in China several times,” said Ju Tong-chan, the North’s chairman of the National Economic Cooperation Committee. “But we have different ways of managing our economy than China, and I believe we should run our special economic zones in different ways. We are still researching our options, but we will not do it that [Chinese] way.”

China was able to expand its economy at high speed after the central government opened up the economy. It gave local governments enough independence to run business autonomously in their areas and attract foreign investment. But Mr. Ju was obviously unconvinced by the success of China’s model. The opening of the economy could boomerang, becoming a threat to the North’s system, he worried.

On factories and farms, North Koreans were still caught up – or at least gave the outward appearance of being caught up ― in a personality cult centered on the nation’s founding family. At cooperative farms and factories, the senior managers’ introductory briefings were always about the lessons taught by Kim Il Sung, North Korea’s first president, and Kim Jong-il, who succeeded him but did not assume the title of national president. These managers’ presentations began with the number of visits by the Kims to the site. There were always paeans to the communist regime’s “military first” policy and slogans to that effect were emblazoned everywhere, making it clear that the military and politics take priority over the economy.

North Korean officials were also reluctant to lay out all pertinent information to investors and journalists.

Kim Yong-il, 45, the manager of the port at Nampo on the country’s west coast, refused to cite specific numbers about the port’s freight-handling capacity. He said only that it could deal with “large amounts” of cargo.

Mr. Rim, the trade ministry chief counselor, said North Korean politics were extremely stable, which guaranteed the security of foreign investments. He gave no data or examples to support that claim of stability, however, and completely ignored the question of North Korea’s nuclear programs and how they might or might not affect stability.

Reacting to the journalists’ remarks that South Korean firms were reluctant to invest in the North because it has been difficult to make profits there, Mr. Ju, the chairman of the National Economic Cooperation Committee, said, “Why is money the priority? Inter-Korean business must be about something more than just monetary calculations.”

He was also visibly upset about Seoul’s policy on economic cooperation. “We made extremely sensitive military restricted areas at Mount Kumgang and Kaesong available to the South,” Mr. Ju said. “But the South has just given us a lot of excuses and failed to cooperate.”

He continued, “To nurture the Kaesong Industrial Complex into a world-class production facility, electronic and advanced technology industries are crucial. But labor-intensive industries are the majority in Kaesong. In this information era of the 21st century, the South has failed to bring in computers for administrative use in Kaesong.”

He also vented some spleen about the United States, asking the journalists why Seoul was so careful not to irritate Washington. He cited the U.S. restrictions on the re-export without prior approval of so-called “dual-use” goods, those with civilian and military applications, to countries it has blacklisted, including North Korea. Other international accords, such as the Wassenaar Agreement, also prevent South Korea from providing the North merchandise and commodities that have “strategic” applications.

But Mr. Ju sounded firm about continuing operations at Kaesong. “It is the nucleus of inter-Korean economic cooperation, and we must make it a success first. Then we can move on to other projects.”

He also dismissed the U.S. concerns that workers in Kaesong were laboring under harsh working conditions, but seemed to sidestep the basic question. “It is a matter that we should deal with,” Mr. Ju said. “Since we manage businesses differently, we are trying to come up with the best resolution to make direct [wage] payments to the workers.”

South Korean economists and businessmen who listened to similar presentations and looked at some of the North’s accounts were troubled by Pyongyang’s rigidity in opening up the economy. That, they said, coupled with the simmering nuclear weapons problem, is the most serious obstacle to attracting foreign investments. Unless U.S. diplomatic ties with North Korea are established, investing in facilities in North Korea and selling “made in North Korea” products on global markets would be difficult and risky, they agreed.

“If a foreign investor wants to visit a factory in the North that he has put money into, he has to obtain an invitation every time, and his schedule and movements in the North are strictly controlled,” said Kwon Yeong-wuk, the trade promotion director at the Korea International Trade Association of Seoul. “Under such circumstances, the North should not expect much in the way of foreign investments.” He said Pyongyang had a “my way or the highway” approach to the economy: If you’re here, follow our rules. The rigidity, he reiterated, is a serious obstacle to investors.

Other experts and businessmen in South Korea said Pyongyang’s attitude toward inter-Korean business in particular makes it hard to earn profit. They complain about the stress North Korean officials put on the concept that business between the two Koreas should be based on the maxim “blood is thicker than water” and not on market principles. An official at North Korea’s National Reconciliation Council argued that South Korean conglomerates should make large investments there based on that concept.

A South Korean businessman who has been looking for business opportunities in the North said he has run into a series of dead ends. “South Korean firms are doing businesses in the global market,” he said. “The largest market is the United States, and not many people would want to give that up to do business with the North.” He added that North Korea’s cheap but skilled manpower is an attractive point, but that poor infrastructure, extremely low purchasing power and the difficulty of obtaining raw materials make China and Vietnam much more attractive investment locales. Kim Yeon-chul, an academic at Korea University in Seoul, agreed with that assessment. “Large companies in South Korea have already automated their production facilities, so labor costs are not important in deciding on investments,” he said. “North Korea must improve other conditions instead of stressing the merits of its manpower or blaming outside causes.”

From Yonhap:

S. Korean lender Nonghyup plans to open branch on N. Korea’s Mt. Geumgang in September

SEOUL, June 22 (Yonhap) — South Korea’s National Agricultural Cooperative Federation(Nonghyup) said Thursday it plans to open a branch at the Mount Geumgang resort in North Korea in September.

Nonghyup will open the Mount Geumgang branch on September 15 with three South Korean employees and two North Korean employees, it told the National Assembly’s Agriculture, Forestry, Maritime Affairs and Fisheries Committee.

The state-run financial institution received approval on May 4 to open the branch at the resort from South Korea’s Unification Ministry.

Nonghyup plans to build a two-floor building for its branch and to operate it 365 days a year without holidays.

In 2004, Woori Bank launched a branch in an industrial complex in the North Korean city of Kaesong, the first case of a South Korean lender setting up a branch in the North.

Korea Herald
Jin Hyun-joo
6/20/2006

A senior United Nations official expects that North Korea will join the U.N.’s initiative to connect rail links between the Korean Peninsula and Europe by November.

Kim Hak-su, executive secretary of the United Nations Economic and Social Commission for Asia and the Pacific, told The Korea Herald that Pyongyang has recently shown positive signs of joining the Trans-Asian Railway Network project.

A test run of container trains on the transcontinental route is possible if North Korea signs the agreement this time during a ministerial conference on transport slated for Nov. 6-11 in Busan, South Korea, said Kim.

The communist nation’s possible participation in the “modern Silk Road” could add momentum to the currently stalled inter-Korean railways projects, observers say.

“North Korea will be expected to sign this one. Every sign shows that they’ll participate. Hopefully in November this year if it is concluded, we are planning a container demonstration run starting from Busan, Seoul, Pyongang, Shinuiju, Beijing and to the West,” he said in an interview with The Korea Herald.

The trans-Asian railway network consists of about 81,000 kilometers of rail routes connecting 28 countries from Asia to Europe. Of the five routes needed for the railway, only the trans-Korean leg is missing. The conceived route’s four other railways run through China, Siberia, Mongolia and Manchuria.

UNESCAP is spearheading the ambitious project as part of its efforts to promote economic and social development in the region.

In 2001, North Korea did not sign a multinational agreement on the implementation of test runs of container block-trains on some routes of the trans-Asian railway.

“If it (the plan) materializes, I will volunteer at the moment to ride on the train first,” the 68-year-old Kim said.

He said other countries’ active participation in the project will pressure the North to join in the move.

“There is what we call a peer countries’ group. Other countries sign, then DPRK will (feel) the pressure.”

Regarding Kim’s optimism for the North’s participation in the project, Na Hee-seung, an adviser with the presidential committee for Northeast Asian cooperation initiatives, said, “Chances are half and half. Hopes are raised, however, as railway issues were actively discussed between the North and other countries this year.”

The multilateral efforts to draw the North to the trans-Asian network will also pave the way for the inter-Korea railway to run, Na added.

“The multilateral action can help resolve the inter-Korean (railway) issue,” he told The Korea Herald.

Late last month, North Korea abruptly cancelled test runs on cross-border railroads which were reconnected in 2003. The railway has been left idle because of the North Korean military’s objection to a test run.

Kim visited Korea last weekend to attend the inauguration ceremony of the first U.N. agency set up in Korea. UNESCAP is headquartered in Bangkok, Thailand.

UNESCAP opened its first Information and Communication Technology for Development Training Center in Incheon, South Korea, with the aim of bridging the gap between IT haves and have-nots in the Asia-Pacific region.

The center will provide training to policy makers, ICT professionals and others from 62 member countries while sharing best practices in the area of ICT development.

Microsoft Corp. also signed a memorandum of understanding with UNESCAP pledging $1 million in support, including software, equipment and cash contributions.